One of the benefits of Tiller is that you can link multiple financial accounts to one or more Tiller Sheets. However, having transactions from multiple accounts funneling into your Transactions sheet can get a little confusing if you use one account to pay off a balance or transfer money to another account, and both are linked to the same Tiller spreadsheet.
So how do we manage this without double counting that money? Usually, these kinds of transactions shouldn't be classified as spending or income. Instead they should use a "Transfer" category type.
What is a transfer?
A transfer is usually thought of as moving money from one account to another.
When moving money from one account to another, this results in two transactions:
One transaction that reflects money leaving an account (it has a negative amount on the Transactions sheet)
One transaction that reflects money going into another account (it has a positive amount on the Transactions sheet)
Understanding the Transfer category type
The Categories sheet Type column allows you to set a category's type as a "Transfer." By default, categories that are set as a Transfer type will not show up on your budget dashboards or affect your cash flow calculations.
The example categories in the Categories sheet by default include a "Transfer" category.
You can further customize the list to get more specific about your transfers if you prefer to be able to track those transfers more granularly. For example, perhaps you have a transfer type category for credit card payments and another for ATM withdrawals.
Transfer Category Type Use Cases
Paying a Credit Card Bill
When you pay the current balance on a credit card from your checking account, both the negative transaction associated with money leaving your checking account and the positive transaction associated with money entering your credit card account could be categorized as "Credit Card Payments", which you have set up on your Categories sheet a transfer type category.
If you’re working to pay off high balance credit card debt, you may need to track certain payments as an expense to ensure you're budgeting for your debt payoff.
If you track your cash, you can categorize the bank ATM withdrawal using a Transfer category, "ATM Withdrawals". The cash you receive should be manually added to your Transactions sheet and then also categorized as an ATM Withdrawal transfer type. Read more on how to track cash with Tiller.
A transfer category type can also be used to track reimbursements. If you are often reimbursed by your employer you could categorize each purchase using a “reimbursement” category that’s set up using a transfer type and then when you’re reimbursed split that transaction (if necessary) to round out the transfers with another “reimbursement” categorized transaction. If you purchase an item that you decide to return, categorize both the payment and the credit as a “Refund" transfer type category.
Budgeting & Transfers
There are some cases where you might not want to use the transfer category for transactions where both accounts are linked because you want the outflowing transactions to show up on your budget.
Paying Off a Mortgage or other Asset Loan
Mortgages and car loans are debts, but once they're paid off they're considered an asset. Even though these are technically transfers (money moving between accounts), we often also want to account for these payments as expenses in our budget.
Saving and Investing
In some scenarios you may also want to budget for your savings and investments. Even though these are also transfers, you may want to track them to ensure you allocate money toward them each month.
How to Budget for Transfers
Create a category for a transfer you want to see in your budget (e.g. Amazon Visa Credit Card or IRA contributions) and set it as an Expense Type. Use this category for debit transactions where money is being paid or leaving an account.
Create a separate category and set it as an income type and hide it from reports by setting the "Hide from Reports" option to "Hide" for that category. Use this to categorize the credit (positive amount) associated with money entering the loan, savings, or investment account.
Hiding it from your reports ensures that it's not being counted as actual income in your budget, and it won't affect your planned or actual cash flow, but allows you to categorize both transactions without having a transfer that doesn't ever sum up to $0.
There really is no "right" way to use transfers and whether or not you need or want to budget for them is up to you and should be based on your financial situation.
If you need more advice about transfers we recommend searching the Tiller Community to review existing discussions and topics on the following commonly related questions:
Should I use a transfer?
How should I think about tracking investments?
How can I track my savings?
How should I categorize debt payments?
How can I track my paycheck deductions?